Krugman’s blog 11/20/14

November 21, 2014

There was one post yesterday, “Structural Deformity:”

Shinzo Abe is doing the right thing, seeking to delay the next rise in consumption taxes; this is good economic policy, and also a fairly new experience for me — I met with a national leader, made a case for the right policy, and he’s actually doing it! (Of course, there were many other people making the same case.)

But there’s a lot of skepticism, which on the whole is justified: Abe is trying to accomplish something very difficult, and it’s by no means clear whether the instruments he’s deploying are sufficient.

Still, there’s one type of criticism that I really, really hate, for Japan and elsewhere — and I hate it especially because it’s one of those things that is so completely accepted by Very Serious People that they don’t even realize that they’re spouting a dubious hypothesis rather than speaking The Truth. I refer to the claim that Japan doesn’t need a demand boost, it needs structural reform (TM).

What are we talking about here? Traditionally, structural reform was offered as an answer to the problem of stagflation. If your economy starts to overheat, with accelerating inflation, despite quite high unemployment, then the argument was that this was due to labor market rigidities — basically a euphemism for a system in which it’s hard to fire people or slash their wages — and that to allow better performance you needed to make the labor market more flexible, i.e., more brutal.

OK, this argument makes a fair bit of sense, although even when the problem is stagflation it’s less ironclad than conventional wisdom would have you believe; there’s always been reason to believe that much “structural” unemployment is actually the result of hysteresis, of the lasting damage done by prolonged recessions. Still, at least this was a coherent argument.

But Japan isn’t suffering from stagflation; neither is Europe. They are, instead, suffering from low inflation or deflation, and persistent shortfalls in demand despite zero interest rates. Why, exactly, is structural reform supposed to help cure this problem?

Indeed, the kind of structural reform people have mostly talked about in the past — making labor markets more flexible, so that it’s easier to cut wages — would, if anything, deepen the slumps. Why? The paradox of flexibility: falling wages and prices increase the real burden of debt, depressing demand further.

In fact, if you think about it, there’s a definite snake-oil feel to calls for structural reform, which is touted as a universal elixir — it cures inflation, but it cures deflation too! Also back pain and bad breath.

Now, there might be some kinds of structural reform that would do Japan some good. For example, changes in land use or building height regulations that made more infill possible in Japanese cities could spur investment, and help increase demand. But the point is that the blanket call for “structural reform” as the answer is intellectually lazy, and destructive. Not only would much of what we call structural reform hurt rather than help; declaring that the problem is structural causes policymakers to take their eye off the ball, since what Japan needs right now, more than anything else, is to escape from deflation any way it can.

Brooks and Krugman

November 21, 2014

Bobo has decided to channel MoDo with a movie review, while simultaneously exhibiting his complete lack of understanding of quantum physics.  In “Love and Gravity” he burbles that Christopher Nolan’s “Interstellar” illustrates how modern science has changed the way we look at love, philosophy and religion.  In the comments “gemli” from Boston started out this way:  “This column takes us on a long, meandering journey through a couple of wormholes to arrive at a political singularity: social engineering projects (i.e., big government) = bad, while webs of loving and meaningful relationships (i.e., local volunteerism) = good.  Mr. Brooks has expressed this point in dozens of different ways over the years. It’s as though every one of his columns is entangled with every other one, both in the past and apparently in the future. But this one has a truly ethereal bent. Never has a wistful plea for states’ rights been so cosmic.”  Prof. Krugman, in “Suffer Little Children,” says today’s immigrants are the same as our parents and grandparents were. President Obama is doing the decent thing with his immigration initiative.  Here’s Bobo:

Most Hollywood movies are about romantic love, or at least sex. But Christopher Nolan’s epic movie “Interstellar” has almost no couples, so you don’t get the charged romance you have in normal movies where a man and a woman are off saving the world.

Instead, there are the slightly different kinds of love, from generation to generation, and across time and space.

The movie starts on a farm, and you see a grandfather’s love for his grandkids and the children’s love for their father. (Mom had died sometime earlier).

The planet is hit by an environmental catastrophe, and, in that crisis, lives are torn apart. The father, played by Matthew McConaughey, goes off into space to find a replacement planet where humanity might survive. The movie is propelled by the angry love of his abandoned daughter, who loves and rages at him for leaving, decade after decade.

On top of that, there is an even more attenuated love. It’s the love humans have for their ancestors and the love they have for the unborn. In the movie, 12 apostles go out alone into space to look for habitable planets. They are sacrificing their lives so that canisters of frozen embryos can be born again in some place far away.

Nolan wants us to see the magnetic force of these attachments: The way attachments can exert a gravitational pull on people who are separated by vast distances or even by death. Their attention is riveted by the beloved. They hunger for reunion.

When the McConaughey character goes into space he leaves behind the rules of everyday earthly life and enters the realm of quantum mechanics and relativity. Gravity becomes variable. It’s different on different planets. Space bends in on itself. The astronauts fly through a wormhole, a fold in the universe connecting one piece of space with another distant piece.

Most important, time changes speed. McConaughey is off to places where time is moving much more slowly than it is on Earth, so he ends up younger than his daughter. Once in the place of an ancestor, he becomes, effectively, her descendant.

These plotlines are generally based on real science. The physicist Kip Thorne has a book out, “The Science of Interstellar,” explaining it all. But what matters in the movie is the way science and emotion (and a really loud score) mingle to create a powerful mystical atmosphere.

Nolan introduces the concept of quantum entanglement. That’s when two particles that have interacted with each other behave as one even though they might be far apart. He then shows how people in love display some of those same features. They react in the same way at the same time to the same things.

The characters in the movie are frequently experiencing cross-cutting and mystical connections that transcend time and space. It’s like the kind of transcendent sensation you or I might have if we visited an old battlefield and felt connected by mystic chords of memory to the people who fought there long ago; or if we visited the house we grew up in and felt in deep communion with people who are now dead.

Bloggers have noticed the religious symbols in the movie. There are those 12 apostles, and there’s a Noah’s ark. There is a fallen angel named Dr. Mann who turns satanic in an inverse Garden of Eden. The space project is named Lazarus. The heroine saves the world at age 33. There’s an infinitely greater and incorporeal intelligence offering merciful salvation.

But this isn’t an explicitly religious movie. “Interstellar” is important because amid all the culture wars between science and faith and science and the humanities, the movie illustrates the real symbiosis between these realms.

More, it shows how modern science is influencing culture. People have always bent their worldviews around the latest scientific advances. After Newton, philosophers conceived a clockwork universe. Individuals were seen as cogs in a big machine and could be slotted into vast bureaucratic systems.

But in the era of quantum entanglement and relativity, everything looks emergent and interconnected. Life looks less like a machine and more like endlessly complex patterns of waves and particles. Vast social engineering projects look less promising, because of the complexity, but webs of loving and meaningful relationships can do amazing good.

As the poet Christian Wiman wrote in his masterpiece, “My Bright Abyss,” “If quantum entanglement is true, if related particles react in similar or opposite ways even when separated by tremendous distances, then it is obvious that the whole world is alive and communicating in ways we do not fully understand. And we are part of that life, part of that communication. …”

I suspect “Interstellar” will leave many people with a radical openness to strange truth just below and above the realm of the everyday. That makes it something of a cultural event.

Now here’s Prof. Krugman:

The Tenement Museum, on the Lower East Side, is one of my favorite places in New York City. It’s a Civil War-vintage building that housed successive waves of immigrants, and a number of apartments have been restored to look exactly as they did in various eras, from the 1860s to the 1930s (when the building was declared unfit for occupancy). When you tour the museum, you come away with a powerful sense of immigration as a human experience, which — despite plenty of bad times, despite a cultural climate in which Jews, Italians, and others were often portrayed as racially inferior — was overwhelmingly positive.

I get especially choked up about the Baldizzi apartment from 1934. When I described its layout to my parents, both declared, “I grew up in that apartment!” And today’s immigrants are the same, in aspiration and behavior, as my grandparents were — people seeking a better life, and by and large finding it.

That’s why I enthusiastically support President Obama’s new immigration initiative. It’s a simple matter of human decency.

That’s not to say that I, or most progressives, support open borders. You can see one important reason right there in the Baldizzi apartment: the photo of F.D.R. on the wall. The New Deal made America a vastly better place, yet it probably wouldn’t have been possible without the immigration restrictions that went into effect after World War I. For one thing, absent those restrictions, there would have been many claims, justified or not, about people flocking to America to take advantage of welfare programs.

Furthermore, open immigration meant that many of America’s worst-paid workers weren’t citizens and couldn’t vote. Once immigration restrictions were in place, and immigrants already here gained citizenship, this disenfranchised class at the bottom shrank rapidly, helping to create the political conditions for a stronger social safety net. And, yes, low-skill immigration probably has some depressing effect on wages, although the available evidence suggests that the effect is quite small.

So there are some difficult issues in immigration policy. I like to say that if you don’t feel conflicted about these issues, there’s something wrong with you. But one thing you shouldn’t feel conflicted about is the proposition that we should offer decent treatment to children who are already here — and are already Americans in every sense that matters. And that’s what Mr. Obama’s initiative is about.

Who are we talking about? First, there are more than a million young people in this country who came — yes, illegally — as children and have lived here ever since. Second, there are large numbers of children who were born here — which makes them U.S. citizens, with all the same rights you and I have — but whose parents came illegally, and are legally subject to being deported.

What should we do about these people and their families? There are some forces in our political life who want us to bring out the iron fist — to seek out and deport young residents who weren’t born here but have never known another home, to seek out and deport the undocumented parents of American children and force those children either to go into exile or to fend for themselves.

But that isn’t going to happen, partly because, as a nation, we aren’t really that cruel; partly because that kind of crackdown would require something approaching police-state rule; and, largely, I’m sorry to say, because Congress doesn’t want to spend the money that such a plan would require. In practice, undocumented children and the undocumented parents of legal children aren’t going anywhere.

The real question, then, is how we’re going to treat them. Will we continue our current regime of malign neglect, denying them ordinary rights and leaving them under the constant threat of deportation? Or will we treat them as the fellow Americans they already are?

The truth is that sheer self-interest says that we should do the humane thing. Today’s immigrant children are tomorrow’s workers, taxpayers and neighbors. Condemning them to life in the shadows means that they will have less stable home lives than they should, be denied the opportunity to acquire skills and education, contribute less to the economy, and play a less positive role in society. Failure to act is just self-destructive.

But speaking for myself, I don’t care that much about the money, or even the social aspects. What really matters, or should matter, is the humanity. My parents were able to have the lives they did because America, despite all the prejudices of the time, was willing to treat them as people. Offering the same kind of treatment to today’s immigrant children is the practical course of action, but it’s also, crucially, the right thing to do. So let’s applaud the president for doing it.

Krugman’s blog, 11/19/14

November 20, 2014

There were two posts yesterday.  The first was “Fiscal Responsibility Claims Another Victim:”

A few more thoughts on Japan.

The bad growth news shows, pretty clearly, that the consumption tax hike was a big mistake. It also shows, by the way, how weak the market monetarist argument — which is that fiscal policy doesn’t matter, because central banks can always achieve the nominal GDP they want — really is; do you seriously want to contend that Kuroda likes what he sees, that he isn’t trying as hard as he can to boost Japan out of deflation?

Beyond that, the Japanese story is another example of the damage wrought by the rhetoric of fiscal responsibility in a depressed economy.

Leave on one side the expansionary austerity nonsense. Even among relatively sensible people, you often encounter calls for a strategy that couples loose fiscal policy, maybe even stimulus, in the short run with measures to address long-run sustainability. So, let’s spend on public works now while also addressing entitlement and/or tax reform to stabilize the budget picture over the next few decades. This sounds reasonable; in a better world it actually would be reasonable. But in this world it ends up producing very bad results.

Why? In practice, political systems (and politicians) have limited ability to focus. If you give them a mixed message about stimulus now but long-run cuts, the urgency of the stimulus part gets lost, and in fact the practical result is generally austerity even in depression.

So it was with Japan. The IMF advised Japan to go ahead with consumption tax hikes, while also endorsing monetary and fiscal stimulus. But as I’ve pointed out already, putting fiscal sustainability up near the front of a report on a country engaged in a very difficult attempt to escape deflation undermined the message, and led to a tax hike that was not effectively offset.

One way to say this is that when people come out with a message along the lines of “We must address fiscal sustainability while supporting short-term recovery,” the message that actually comes across is more like

So why blur things this way? The usual answer is still that unless you address the long-term issues, you might have a loss of confidence that undermines recovery. This is, however, unlikely — both because the fiscal consequences of a delay are small and because losing confidence would actually be a good thing in this situation.

I have to admit that the Fund’s role here somewhat surprises me. The IMF is in general making a lot of sense on macro issues these days, and is well aware of the dangers of deflation. So I had hoped it would be more sensitive to the risks of responsibility rhetoric in this case.

But anyway, another lesson from Japan — the country that has offered many useful lessons to the West, none of which our policymakers have been willing to learn.

Yesterday’s second post was “Misteaks:”

I’ve made a few. Here’s me talking with Business Insider about the big ones and what I learned.

Blow, Kristof and Collins

November 20, 2014

In “The Solid South Will Rise Again” Mr. Blow points out the obvious:  The region has become so Republican, particularly since President Obama was elected, that there isn’t much left there for the Democrats to salvage.  Well, decades of tinkering with gerrymandered districts has helped too…  Mr. Kristof has a question:  “Do Politicians Love Kids?”  He says if American politicians are looking for a genuinely bipartisan issue to work together on, here’s a suggestion: invest in early education.  That’ll likely happen when pigs fly.  Ms. Collins, in “Tough Times for Penguins,” says that new era of bipartisan cooperation in Washington didn’t last long. Still, we’re doing better than the king penguins.  Here’s Mr. Blow:

Democrats have abandoned Senator Mary Landrieu of Louisiana, who is in a tough runoff election. (Tough is the mild way of putting it. Polls show her down by double digits to her Republican opponent.)

Not only has the Democratic Party pulled its financial support for her campaign, but this week Senate Democrats refused to rally around her push for passage of the Keystone XL pipeline bill.

Maybe Democrats are simply giving up on Landrieu. Or maybe it’s something bigger: They’re giving up on the South, at least in the short term.

This region has become so solidly Republican, particularly since President Obama was elected, that there isn’t much left there for the Democratic Party to defend or salvage. For instance, prior to the 2010 midterms there were 54 Blue Dog Democrats in Congress. In the outgoing Congress, there are only 19 left, including eight from the South.

And Republican gerrymandering has further weakened Democratic power, even when Democrats vote in high numbers. As Lee Fang wrote this month at Republic Report, “Republican gerrymandering means Democratic voters are packed tightly into single districts, while Republicans are spread out in such a way to translate into the most congressional seats for the G.O.P.”

After the midterms, The Associated Press provided this tally:

“In January, the G.O.P. will control every governor’s office, two U.S. Senate seats, nearly every majority-white congressional district and both state legislative chambers in North Carolina, South Carolina, Georgia, Alabama, Tennessee, Mississippi, Arkansas and Texas.”

It is important and relevant that The Associated Press pointed out the racial dichotomy because, in the South, ideology and racial identity are nearly inseparable.

I’m reminded of the story that one of my brothers told about being transferred along with a white co-worker to Mississippi. He and the co-worker were shopping for homes at the same time. The co-worker was aghast at what he saw as redlining on the part of the real estate agent, who never explicitly mentioned race. When the coworker had inquired about a neighborhood that included black homeowners, the agent responded, “You don’t want to live there. That’s where the Democrats live.” The co-worker was convinced that “Democrats” was code for “black.”

He may well have been right. Mississippi is among the most racially bifurcated states politically, with one of the highest percentage of black voters in the country. In 2012, 96 percent of blacks voted for the Democratic presidential ticket, according to exit polling data, while 89 percent of whites voted for the Republican ticket.

Landrieu’s Louisiana isn’t much different. In 2012, Obama won only 10 of the state’s 64 parishes. Most of the 10 had a majority-black population, and the rest had black populations approaching 50 percent. Earlier this month, Landrieu got 94 percent of the black vote but only 18 percent of the white vote.

Pat Buchanan has echoed The Associated Press in his assessment of the near complete political and racial divide in the South, writing last week, “South Carolina, Georgia, Alabama, Mississippi, Louisiana and Arkansas will not send a single white Democrat to Congress, if Mary Landrieu loses her runoff. The only Democrats in the House from Deep South states will be African-Americans.”

As Gallup pointed out in March, “Whites have become increasingly Republican, moving from an average 4.1-point Republican advantage under Clinton to an average 9.5-point advantage under Obama.”

And this increasingly homogenous Southern delegation is likely to wield increased influence, as The Associated Press points out:

“In Washington, Senate Republicans haven’t parceled out leadership assignments, but Southerners figure prominently among would-be major committee chairmen: Mississippi’s Thad Cochran (Appropriations); Alabama’s Jeff Sessions (Budget) and Richard Shelby of Alabama (Banking, Housing and Urban Affairs); Bob Corker of Tennessee (Foreign Relations); Richard Burr of North Carolina (Intelligence); Lamar Alexander of Tennessee (Health, Education, Labor and Pensions); Johnny Isakson of Georgia (Veterans Affairs).”

Furthermore, many of the likely most talked about Republican presidential candidates are from the South: Jeb Bush, Ted Cruz, Bobby Jindal, Rand Paul, Rick Perry, Marco Rubio and Mike Huckabee.

The degree to which the South remains solidly Republican may well depend on the changing racial composition of Southern states, specifically a rise in their non-white population.

According to the Census Bureau, six of the 10 states with the largest “black alone-or-in-combination populations” in 2010 were Southern states: Florida, Texas, Georgia, North Carolina, Maryland and Virginia. And the four that experienced substantial growth between 2000 and 2010 in their black alone-or-in-combination populations were all Southern: “Florida grew by 29 percent, Georgia by 28 percent, Texas by 27 percent and North Carolina by 21 percent.”

In addition, as the Pew Research Center’s Hispanic Trends Project pointed out last year, nine of the 10 states with the fastest-growing Hispanic populations were also in the South: Alabama, South Carolina, Tennessee, Kentucky, Arkansas, North Carolina, Mississippi, Maryland and Georgia.

This regional hyper-racialization of our politics has many origins, some historical and some current, but it does not bode well for the future of the country as a whole.

We are self-sorting ourselves into hardened, impenetrable citadels of ideological sameness that harks back to the nation’s darker days.

You’ll notice that there’s not a word about Howard Dean and his 50 State Strategy, you know, the strategy that was actually working until Dean was kicked to the curb…  Here’s Mr. Kristof:

We Americans love children.

Indeed, we love them so much that, on average, child care workers earn almost as much per hour ($10.33) as workers who care for animals ($10.82), according to a new study from the University of California, Berkeley.

We love them so much that only 38 percent of American 3-year-olds are enrolled in education programs. The average is 70 percent among the 34 industrialized countries in the Organization for Economic Cooperation and Development.

So if politicians are genuinely looking for a bipartisan issue to break through the Washington gridlock, here’s a suggestion: invest in early education.

A poll over the summer found that 71 percent of voters supported a major federal investment in early education, including huge majorities of Democrats, Republicans and independents alike. Leaders in doing this have been tinted both blue (New York City) and red (the State of Oklahoma) — as well as camouflage green (the United States military has an excellent preschool program). Jim Messina, the campaign manager for President Obama in 2012, and Kevin Madden, a senior adviser to Mitt Romney’s rival campaign that year, this month wrote a joint memo advocating that both parties back investments in early education.

“Perhaps the biggest political opportunity for both parties lies in the nonpartisan issue of early childhood education,” Messina and Madden wrote.

Early education is the low-hanging fruit of public policy. It has the approval in principle of both President Obama and House Speaker John Boehner, and abundant research suggests that early help for disadvantaged children could chip away at inequality, save public money and help those children reach the starting line.

I dropped in the other day on James Heckman, an owlish University of Chicago professor and Nobel Prize-winning economist who is the leading scholarly advocate of early interventions. He’s a numbers geek who advocates investing in early childhood programs simply because that is where society gets the most bang for the buck — returns of 7 percent to 10 percent per year, by his calculations.

Heckman argues that the cheapest way to reduce crime is to invest in early childhood programs for at-risk kids. He has crunched the numbers and found that to get the same reduction in crime by adding police officers would cost at least five times as much.

At 70 and showing no signs of slowing down, Heckman co-authored two major studies published in Science this year that underscored that the real question isn’t whether we can afford early education initiatives, but whether we can afford not to provide them:

• One follow-up found that adults who, as disadvantaged children, had been randomly assigned to attend an excellent preschool were much healthier than those who had been randomly assigned to the control group.

Now in their mid-30s, the men who had gone to the preschool had average blood pressure of 126 over 79; the controls were a much more worrisome 143 over 92. Those men who had attended the preschool were less than one-third as likely to be severely obese. Because they were also doing better in life, those preschool graduates were far more likely to have health insurance.

• Another follow-up looked at adults in Jamaica who 20 years earlier had been growth-stunted toddlers. At that time, some had been assigned to a control group and some to get a weekly one-hour visit from a health aide who coached parents on doing more to engage their children. Again, the results were stunning. Those who as children had been in the group getting the weekly visits were less likely to commit violent crimes than those in the control group. They stayed in school longer, and they earned 25 percent more as adults.

“It blew me away,” Heckman said of the Jamaica study. What was remarkable was how simple and low-cost the assistance was — a one-hour weekly visit by a health aide — yet it changed the lives of the children who participated.

“Early education” isn’t just about pre-K but rather an umbrella term for all interventions between pregnancy and age 5. Some of the most effective seem to occur during pregnancy and infancy, counseling at-risk women not to drink, smoke or take drugs while expecting, and then after birth, helping them breast-feed and read to the child, while avoiding lead paint and other toxins.

Why are these early interventions so effective? Apparently because the first few years are the window when the brain is forming and when basic skills like self-control and grit are developed.

Washington will probably be a discouraging gridlocked mess for the next couple of years. But here’s a rare issue where it’s just conceivable that we could make progress and build a stronger and more equitable future for our nation.

If our politicians really do love children, here’s a way to prove it.

The love the IDEA of children, not the messy, needy little creatures themselves.  Here’s Ms. Collins:

Scientists say that fur seals in the Antarctic are having sex with the penguins.

This may have been going on for some time. A South African research team has published a paper on it, “Multiple Occurrences of King Penguin Sexual Harassment by Antarctic Fur Seals.” There’s also a video featuring a rather large seal and a really unhappy looking bird.

“This may be an emergent behavior,” the team wrote ominously.

I am bringing you this disturbing news because it may make you feel better about politics, Congress, and the general state of the nation. True, virtually everything that’s happened since the election suggests things are going to get worse rather than better. But hey, at least we’re not being governed by seals.

All this brings us to Washington, where congressional leaders from both parties have been making copious promises about seeking common ground. Generally, the specifics end with some vague reference to doing “tax reform.”

“Reagan and Tip O’Neill saved Social Security for a generation, did the last comprehensive tax reform. We need to do that again,” said Mitch McConnell, the next Senate majority leader, in his paean to bipartisan cooperation.

Reagan and Tip O’Neill agreed to the largest peacetime tax increase in American history. Do you think that’s what McConnell has in mind? Otherwise, one is forced to consider the possibility that he is making things up. The Democrats and Republicans are definitely in accord about the need for tax reform. However, given the fact that they disagree completely about what that reform should entail, chances of progress do not seem great.

But maybe wishing can make it so. Even as young fur seals are apparently compensating for the shortage of mating partners by looking at a king penguin and imagining that it is a female seal.

On Thursday, President Obama is expected to announce he’s protecting millions of undocumented immigrants from deportation through use of his executive power. And that will probably be the end of the talk of amity. The Republicans feel that if Obama usurps the congressional prerogative to make immigration policy, he will have poisoned the well, waved the red flag and generally ruined all the possibility for a new era of cooperation. They were saying that all this week, as they worked feverishly to pass a bill that would override the executive branch’s power to grant permits for projects that cross the national border.

That would be the Keystone pipeline bill. It failed when Senate supporters fell one vote short of the 60 needed to stop a Democratic filibuster. This happened on the same day that a bill to get the federal government out of the business of collecting citizens’ phone records died in a Republican filibuster.

Yes, people, both parties did it. However, since the Republicans are the ones promising to usher in a new order, we are going to pay special attention to them.

“I thought we had a new day coming, when McConnell said he wanted to go back to the regular order of having votes, and amendments and all,” said Patrick Leahy, the chairman of the Senate Judiciary Committee. This was in a phone interview, so it was hard to determine conclusively whether Leahy was being somewhat wry. “He said the next few weeks would set a positive tone for Congress.”

Leahy’s bill, the USA Freedom Act, was a response to the Edward Snowden leaks, particularly the revelation that the federal government is stockpiling everybody’s phone records. It was the bipartisan product of six public hearings and painful negotiations that attracted the support of über-conservative senators like Ted Cruz of Texas and Mike Lee of Utah. One of its major features was a requirement that the call records stay with the phone companies. The National Security Agency could retrieve them, but it would have to be specific about whose calls were being traced and why they were needed.

McConnell led the battle to keep the status quo. (“This is the worst possible time to be tying our hands behind our backs.”) During the debate, after the minority leader finished his remarks, Leahy asked if he would respond to a few questions, but McConnell was already on his way out of the room. “He said: ‘I’m sorry but I don’t have time.’ In 40 years I’d never seen anybody do that,” Leahy said.

Well, McConnell had been through a lot. The run-up to the debate on Leahy’s bill was a preview of what the new Senate will have in store as it attempts to operate with a trio of young presidential hopefuls in its ranks. Ted Cruz liked the bill and mentioned the Bill of Rights repeatedly. Marco Rubio of Florida hated the bill and summoned up the terror of terror. Rand Paul, that celebrated libertarian, attempted to have it all by announcing that he was voting with McConnell against the bill because it wasn’t strong enough. But he did say he felt bad about it.

At least the seals never promised the penguins it’d be a new tomorrow.

Krugman’s blog, 11/18/14

November 19, 2014

There was one post yesterday, “The Structure of Obamacare:”

The big revelation of this week has been how many political pundits have spent six years of the Obama administration opining furiously about the administration’s signature policy without making the slightest effort to understand how it works. They’re amazed and in denial at the suggestion that it has the same structure as Romneycare, which has been obvious and explicit all along; they are shocked, shocked to learn that it uses the mandate as an alternative to taxing and spending, which has always been completely obvious and open.

Let me expand on the second point, by referring to my own publicly available class notes from 2012. To explain Obamacare, I started with a schematic representation of how single-payer health care works:

Then I showed a schematic of ObamaRomneycare — it calls it that right on the slide — and showed that to a first approximation it delivered the same results, but with a much smaller amount of money flowing through the federal budget:

So the community rating/mandate/subsidy system is in effect a way of simulating single payer, but with lower headline taxing and spending.

It’s important to be clear what this does NOT mean — it doesn’t mean that there is a huge hidden burden on the public. For the most part, people buying health insurance would have bought it anyway. Under single-payer, they would have stopped doing that, and paid taxes instead; under the ACA, they continue to pay premiums but don’t pay the extra taxes. There’s no secret extra cost.

So, why was Obamacare set up this way? It’s mainly about politics, but nothing that should shock you. Partly it was about getting buy-in from the insurance industry; a switch to single payer would have destroyed a powerful industry, and realistically that wasn’t going to happen. Partly it was about leaving most people unaffected: employment-based coverage, which was the great bulk of private insurance, remained pretty much as it was. This made sense: even if single-payer would have been better than what people already had, it would have been very hard to sell them on such a big change. And yes, avoiding a huge increase in on-budget spending was a consideration, but not central.

The main point was to make the plan incremental, supplementing the existing structure rather than creating massive changes. And all of this was completely upfront; I know I wrote about it many times.

Look, I understand why the hired guns of the right have to act ignorant and profess outrage. But I really am shocked at centrists who apparently thought they could opine on the politics of health reform, year after year, without taking a hour or two to learn how the darn thing was supposed to work.

Friedman and Bruni

November 19, 2014

The Moustache of Wisdom asks “Did Dubai Do It?”  He says on a visit to Dubai, several conversations pondered whether the crown jewel of the United Arab Emirates caused the Arab awakening.  In “From Profits to Politics” Mr. Bruni says Americans soured on government are giving a different breed of leaders a chance.  Here’s The Moustache of Wisdom, writing from Dubai:

Ever since the Arab awakening in late 2010, America has lurched from one policy response to another. We tried decapitation without invasion in Libya; it failed. We tried abdication in Syria; it failed. We tried democratization in Egypt, endorsing the election of the Muslim Brotherhood; it failed. We tried invasion, occupation, abdication and now re-intervention in Iraq and, although the jury is still out, only a fool would be optimistic.

Maybe the beginning of wisdom is admitting that we don’t know what we’re doing out here and, more important, we don’t have the will to invest overwhelming force for the time it would take to reshape any of these places — and, even if we did, it is not clear it would work.

So if the Middle East is a region we can neither fix nor ignore, what’s left? I’m for “containment” and “amplification.”

How so? Where there is disorder — Iraq, Syria, Yemen, Libya — collaborate with regional forces to contain it, which is basically what we’re doing today. I just hope we don’t get in more deeply. Where there is imposed order — Egypt, Algeria — work quietly with the government to try to make that order more decent, just, inclusive and legitimate. Where there is already order and decency — Morocco, Jordan, Lebanon, Kurdistan and the United Arab Emirates — do everything to amplify it, so it becomes more consensual and sustainable. And where there is order, decency and democracy — Tunisia — give it as much money as they ask for, (which we haven’t done).

But never forget: We can only amplify what they do. When change starts or depends on our staying power, it is not self-sustaining — the most important value in international relations. When it starts with them, it can be self-sustaining. The best example of that is the U.A.E. and its crown jewel, Dubai. I had several conversations here on this question: Did Dubai cause the Arab awakening?

Wait. How could it have? The U.A.E. and Dubai are absolute monarchies that tolerate no opposition or real freedom of the press. It’s because Dubai, beyond the glitz, glass and real estate booms and busts, has become the Manhattan of the Arab world — a place where young Arabs from across the region can come to realize their full potential in arts, business, media, education and technology start-ups — with world-class companies — and in their own culture, their own language, their own religious milieu, their own food preferences, music and clothing.

As more young Arabs came to Dubai, or viewed it on TV from afar, more and more asked: “Why don’t we have that in my Arab country?” The former Palestinian Prime Minister Salam Fayyad said to me: “People know what it means to be a citizen everywhere now.” It was one thing for young Egyptians to observe the success of Singapore or Brazil and compare it with their own flagging country, but when Dubai showed that Arabs could build a Singapore, where young Arabs could realize their potential, Dubai became politically subversive. Across the region, you heard the question: “Even if we can’t have democracy, why can’t we at least have Dubai?”

“Dubai is the capital of the Arab Spring — the real revolution started here,” argued Mazen Nahawi, 39, a Palestinian who founded News Group International, a media-monitoring company here in Dubai. The Arab awakening “did not start because they wanted freedom and democracy. It started in the mind of the average [Arab] who the saw the evidence in Dubai that we could do things that are hard, and we could do them world class [like Dubai Ports and Emirates Airlines], with a high level of performance in the corporate and governmental sectors … and with a lot of tolerance. … And they compared that with the reality and rhetoric of the Arab military regimes” they were living under.

There is a U.A.E. government-funded incubator, called “twofour/54,” aimed at sparking an Arabic media and entertainment industry. I always try to visit. In 2008, it was incubating 15 companies. Today, it’s got 311, with filmmakers, artists and starter-uppers coming from every Arab country and South Asia.

“Al Jazeera gave Arabs a window on the world, and Dubai proved it could be done here,” added Nahawi. When you see someone just like you succeeding next door while your society is not, it becomes political. In April, ASDA’A Burson-Marsteller released its third Arab youth survey, finding: “For the third year running, the U.A.E. remains the most popular country to live in and the country Arab youth would most like their country to emulate.” The U.A.E. got 39 percent. The United States got 21 percent.

The point: It has to start with them. The best we can do is amplify. David Kilcullen, the Australian counterinsurgency expert who served with the U.S. in Iraq and Afghanistan, told me: “Just like there is a spark of life in a physical body, there has to be a spark of legitimacy and coherence in a body politic. And, if it is not there, trying to substitute for it is like putting a cadaver on a slab and harnessing a lightning bolt to it to bring it back to life. You end up with Dr. Frankenstein. You can animate a corpse and make it walk and talk, but sooner or later it’s going to go rogue. … When you don’t have the local leadership, invading does not make things better. It makes them worse.”

Now here’s Mr. Bruni:

Just two years ago, during his first term at the helm of Colorado, John Hickenlooper did a quick mental survey of his fellow governors and realized something that he found surprising.

By his very rough count, only about five governors, including him, had spent a significant chunk of their professional lives in the private sector and in roles that included the management of dozens of employees. The other governors, many of them career politicians, didn’t have that kind of managerial experience.

But when Hickenlooper, who once ran a small empire of brewpubs and restaurants, took stock of the 11 new governors elected Nov. 4, his surprise was the exact opposite.

Most of them have precisely such experience and have achieved enormous success in the private sector, where many of them have spent much more time than they have in public office.

Doug Ducey, the Republican governor-elect of Arizona, worked as the chief executive of Cold Stone Creamery, the ice cream parlor chain. His government service is limited to his last four years as the state’s treasurer.

Gina Raimondo, the Democratic governor-elect of Rhode Island, also didn’t enter politics until four years ago. Like Ducey, she’s her state’s treasurer. And like him, she’s best known for what she did in business. She started Rhode Island’s first venture capital firm.

Tom Wolf, the Democratic governor-elect of Pennsylvania, was the state’s secretary of revenue from April 2007 to November 2008, but that short stint pales beside the many years he spent running a big family business that specializes in kitchen cabinets.

Larry Hogan, the Republican governor-elect of Maryland, has never held elective office before but spent three decades running a real estate development company that he founded.

In a column two weeks ago, my Times colleague David Brooks noted the elections of Hogan and of Bruce Rauner of Illinois, who ran a private equity firm, as examples of the Republican Party’s re-establishment of its roots in the business community.

But the bigger group of governors-elect from both parties also suggests a larger lesson, shedding light on the mood of an electorate fed up with the status quo.

“The American public sent a message through this election of new governors,” said Hickenlooper, a Democrat whose familiarity with their résumés reflects his current position as the chairman of the National Governors Association.

And to his ears, the public was saying that it’s desperate for more effective, efficient government and willing to see if leaders with “serious executive management experience” can deliver it.

Richard Celeste, the former Democratic governor of Ohio, agreed. “People chose governors who brought, presumably, very credible private-sector experience,” he said. “I don’t think it’s about ideology — conservative versus liberal — but about this notion: We really do want government to work.”

He and other observers cautioned that each gubernatorial race had its own context and currents, many of them more potent than any overarching trend. In Illinois, for example, Rauner toppled a Democratic incumbent, Pat Quinn, who seemed ripe for defeat no matter his opponent.

“But everybody’s frustrated,” said Bradley Tusk, a strategist who works in state and local politics nationwide. “People are looking for alternatives.”

Some candidates with strong private-sector ties also have financial advantages, in terms of their personal wealth and fund-raising connections.

Their most lucrative asset, though, may be their ability to present themselves as political outsiders, a claim that seemingly eclipses even the taint of the trades in which they profited.

Some of these new governors come from professions — venture capital, private equity, stocks — that have come under withering scrutiny over the last decade. But in a country convinced that government is broken and its servants hopeless, perhaps plutocrats are cuddlier than bureaucrats.

Will their business backgrounds lead to better results? A state isn’t a company; the lawmakers in a Legislature aren’t employees obliged to follow orders.

But there are indeed examples of well-regarded governors right now who draw on private-sector management experience. They include Jack Markell of Delaware, a Democrat, and Bill Haslam of Tennessee, a Republican, both of whom are frequently singled out for praise by political observers.

Hickenlooper said that the country’s founding fathers “didn’t intend such a large percentage of public servants to have worked only in government.”

And he asserted that “many of the lessons of business can apply to state government.”

I’ll buy that. And I agree with him wholeheartedly on this: “You can argue that government should be smaller or bigger or this or that,” he said. “Either way, it needs to work.”

Krugman’s blog, 11/17/14

November 18, 2014

There were two posts yesterday.  The first was “Contractionary Policies Are Contractionary:”

Terrible numbers from Japan. Probably the drop was overstated — I don’t have any special knowledge here, but other indicators didn’t look quite this bad. But still, no question that the ill-considered sales tax hike of the spring is still doing major damage.

Fairly clear now that Abe won’t go through with round two, which is good news.

So contractionary policy is contractionary. I could have told you that, and in fact have told you that again and again. But some people still don’t get the message. In Germany, the Bundesbank president opposes expansionary monetary policy because it might reduce the pressure for fiscal austerity:

“Such purchases might create new incentives to run up debt, besides adding to the reform fatigue in a number of countries,” he cautioned.

Translation: if EB purchases of debt keep interest rates down (as the implied promise to do “whatever it takes” has already been doing), deeply depressed economies might not feel the need to keep slashing spending to eliminate budget deficits.

That’s actually quite an awesome concern to express at this moment. European recovery has stalled, largely thanks to fiscal contraction; inflation is far below target, and outright deflation looms; and the political basis for the European project is coming apart at the seams. And Weidmann worries that monetary expansion might make life too easy for debtors.

But as Wolfgang Munchau says in a terrific column today,

German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes.

Wish I’d written that! Although it’s not so much Keynes as the whole notion that inadequate demand can ever be a problem that they don’t get. Munchau tells us something I didn’t know, that Ludwig Erhard “once tried to explain the Great Depression in terms of cartels.” In the German economics mindset, there is only microeconomic distortion; macro problems, even in the middle of Europe’s second Great Depression, don’t exist.

How does this end? We have to keep pounding on the issues, and I’m reasonably sure that Draghi and co get it. But with the largest player on the European scene living in a fantasy world, the best guess has to be that nothing much is done until there is complete political crisis, with anti-European nationalists taking over one or more major nations.

Yesterday’s second post was “A Pundit Explains What’s Wrong With Washington:”

Or, actually, demonstrates by example what’s wrong with Washington.

Matt Yglesias finds Ron Fournier saying this about health reform:

On health care, we needed a market-driven plan that decreases the percentage of uninsured Americans without convoluting the U.S. health care system. Just such a plan sprang out of conservative think tanks and was tested by a GOP governor in Massachusetts, Mitt Romney.

Instead of a bipartisan agreement to bring that plan to scale, we got more partisan warfare. The GOP resisted, Obama surrendered his mantle of bipartisanship, and Democrats muscled through a one-sided law that has never been popular with a majority of the public.

The mind reels. How is it possible for anyone who has been following politics and, presumably, policy for the past six years not to know that Obamacare is, in all important respects, identical to Romneycare? It has the same three key provisions — nondiscrimination by insurers, a mandate for individuals, and subsidies to make the mandate workable. It was developed by the same people. I and many others have frequently referred to ObamaRomneycare.

Well, I’ve know for years that many political pundits don’t think that understanding policy is part of their job. But this is still extreme. And I’m sorry to go after an individual here — but for God’s sake, don’t you have to know something about the actual content of a policy you critique?

And what’s actually going on here is worse than ignorance. It’s pretty clear that we’re watching a rule of thumb according to which if Republicans are against a proposal, that means it must be leftist and extreme, and the burden on the White House is to find a way to make the GOP happy. Needless to say, this rewards obstructionism — there is literally nothing Obama can do to convince some (many) pundits that he’s making a good faith effort, because they don’t pay any attention to what he does, only to the Republican reaction.

Awesome.

Brooks and Nocera

November 18, 2014

In “Obama in Winter” Bobo whines out a question:  Why has the Obama administration been behaving so strangely since the midterms?  In the comments “Winning Progressive” from Philadelphia has this to say:  “Mr. Brooks criticizes President Obama for not standing down and moving even further right to appease Republicans in the wake of the GOP’s electoral victory in the 2014 midterms. But of course Mr. Brooks, and the rest of the media, didn’t demand that Republicans move to the left and appease Democrats after Republicans lost in 2006, 2008, and 2012. Instead, the GOP was given a free pass by the media to move even further to the right and obstruct everything the Dems tried to do.”  In “Putin Plays Hardball” Mr. Nocera says he is striking back at a critic of Russian capitalism by putting a dead man on trial.  Here’s Bobo:

They say failure can be a good teacher, but, so far, the Obama administration is opting out of the course. The post-midterm period has been one of the most bizarre of the Obama presidency. President Obama has racked up some impressive foreign-policy accomplishments, but, domestically and politically, things are off the rails.

Usually presidents use midterm defeats as a chance to rethink and refocus. That’s what Obama did four years ago. Voters like to feel the president is listening to them.

But Obama’s done no public rethinking. In his post-election news conference, the president tried to reframe the defeat by saying the turnout was low, as if it was the Republicans’ fault that the Democrats could only mobilize their core base. Throughout that conference, the president seemed to detach himself from his own party, as if the Democrats who lost their jobs because of him were a bunch of far-off victims of some ethereal malaise.

Usually presidents at the end of their terms get less partisan, not more. But with his implied veto threat of the Keystone XL oil pipeline, President Obama seems intent on showing that Democrats, too, can put partisanship above science. Keystone XL has been studied to the point of exhaustion, and the evidence overwhelmingly suggests that it’s a modest-but-good idea. The latest State Department study found that it would not significantly worsen the environment. The oil’s going to come out anyway, and it’s greener to transport it by pipeline than by train. The economic impact isn’t huge, but at least there’d be a $5.3 billion infrastructure project.

Usually presidents with a new Congressional majority try to figure out if there is anything that the two branches can do together. The governing Republicans have a strong incentive to pass legislation. The obvious thing is to start out with the easiest things, if only to show that Washington can function on some elemental level.

But the White House has not privately engaged with Congress on the legislative areas where there could be agreement. Instead, the president has been superaggressive on the one topic sure to blow everything up: the executive order to rewrite the nation’s immigration laws.

The president was in no rush to issue this order through 2014, when it might have been politically risky. He questioned whether he had the constitutional authority to do this through most of his first term, when he said that an executive order of this sort would probably be illegal.

But now the president is in a rush and is convinced he has authority. I sympathize with what Obama is trying to do substantively, but the process of how it’s being done is ruinous.

Republicans would rightly take it as a calculated insult and yet more political ineptitude. Everybody would go into warfare mode. We’ll get two more years of dysfunction that will further arouse public disgust and antigovernment fervor (making a Republican presidency more likely).

This move would also make it much less likely that we’ll have immigration reform anytime soon. White House officials are often misinformed on what Republicans are privately discussing, so they don’t understand that many in the Republican Party are trying to find a way to get immigration reform out of the way. This executive order would destroy their efforts.

The move would further destabilize the legitimacy of government. Redefining the legal status of five million or six million human beings is a big deal. This is the sort of change we have a legislative process for. To do something this seismic with the stroke of one man’s pen is dangerous.

Instead of a nation of laws, we could slowly devolve into a nation of diktats, with each president relying on and revoking different measures on the basis of unilateral power — creating unstable swings from one presidency to the next. If President Obama enacts this order on the transparently flimsy basis of “prosecutorial discretion,” he’s inviting future presidents to use similarly flimsy criteria. Talk about defining constitutional deviancy down.

I’m not sure why the Obama administration has been behaving so strangely since the midterms. Maybe various people in the White House are angry in defeat and want to show that they can be as obstructionist as anyone. Maybe, in moments of stress, they are only really sensitive to criticism from the left flank. Maybe it’s Gruberism: the belief that everybody else is slightly dumber and less well-motivated than oneself and, therefore, politics is more about manipulation than conversation.

Whatever it is, it’s been a long journey from the Iowa caucuses in early 2008 to the pre-emptive obstruction of today. I wonder if, post-presidency, Mr. Obama will look back and regret that he got sucked into the very emotional maelstrom he set out to destroy.

Bobo, here’s a big platter of salted dicks for you to eat.  Enjoy, you schmuck.  Now here’s Mr. Nocera:

This week marks the fifth anniversary of Sergei Magnitsky’s death in a Russian prison. He was 37 years old, a member of the emerging middle class who worked as a lawyer for a man named Bill Browder, the leader of the largest Russia-only investment firm in the world. Browder’s company, Hermitage Capital Management, started with $25 million during the Wild West-era of early Russian capitalism and had $4.5 billion in assets by the early 2000s.

Over time, Browder became an activist investor of sorts, exposing corruption in Russian companies and trying to make Russian capitalism more transparent. In doing so, he thought, he could both steer Russian companies a little closer to the Western model while also making money for his firm.

But, when Vladimir Putin became the president of Russia in 2000, he and his cronies were not interested in corporate transparency. How could they line their pockets if everything was transacted out in the open? So Browder became persona non grata. After a trip to Britain in 2005, he was refused re-entry. A few fictitious documents later, and Hermitage had $1 billion in “liabilities.” Then, a handful of officials involved in a takeover of Hermitage requested — and received within 24 hours! — a $230 million tax refund. It was a textbook example of the kind of corporate pillaging for which the Putin kleptocracy became infamous.

Browder pleaded with Magnitsky to flee the country, as his other lawyers had done. But Magnitsky insisted on investigating — and speaking out about — the fraud that had taken place. For his troubles, he was imprisoned in 2008. By summer of 2009, he had developed pancreatitis, which went untreated despite his pleas. He died that November. Browder says that when he learned of Magnitsky’s death, it was “the worst news I had ever received in my life.”

Ever since, Browder has worked to find ways to extract some justice on Magnitsky’s behalf. Well before the current Western sanctions on Russia, for instance, Browder pushed for travel and financial sanctions to be imposed on the Russian officials who were involved in Magnitsky’s imprisonment. In December 2012, Congress passed a bill that did just that, called the Sergei Magnitsky Rule of Law Accountability Act. Browder continues to push for similar laws in various European countries.

As you might expect, given the pugnacious nature of Putin’s government, Russia hasn’t take this law lying down. The first thing it did was halt American adoption of Russian children. It has given promotions to several officials who were sanctioned. And it has also continued to go after both Browder and, believe it or not, the deceased Magnitsky.

In July 2013, Russia put both Magnitsky and Browder on trial. The two men were accused of tax evasion going back to 2001 — despite the fact that the statute of limitation in Russia for tax evasion is 10 years. It was the first posthumous trial in Russia’s history. The judge in the case was among those who were on the U.S. sanctions list. To the surprise of no one, Magnitsky and Browder were both convicted, one posthumously and the other in absentia.

There is another thing the Putin government has been doing to get back at Browder. It has made repeated attempts to have him put on Interpol’s “Red Notice” list — which is a kind of international wanted-poster for fugitives. The idea is that when a person on the list is arrested in one country, he or she would be handed over to the country where he or she is wanted.

Interpol has long been accused of allowing its Red Notices to be used for political purposes. A year ago, a group called Fair Trials International released a report accusing a handful of countries of using Interpol to cause problems for dissidents and activists — among them Belarus, Turkey, Iran and Russia.

The first attempt came in May 2013. Browder succeeded in pushing it back. The second attempt came two months later — soon after Browder’s nine-year sentence by a Moscow court. Again, Interpol declined to issue a Red Notice on Browder. This past winter, a Russian delegation visited Interpol headquarters in Lyon, France, to press its case. Thanks to last year’s trial, Russia could now say that Browder had been convicted of a crime.

Sure enough, Interpol — which, just two weeks ago, installed a new secretary general, a German lawyer named Jürgen Stock — has agreed to once again entertain the idea of labeling Browder a fugitive from Russian justice. It is scheduled to make its decision later this week.

You would think that Putin’s government has enough to worry about these days, between the crisis in Ukraine, Western sanctions, and the fall in the price of oil, which could push the Russian economy into recession. But, apparently, there is always time to attack Bill Browder.

Krugman’s blog, 11/16/14

November 17, 2014

There was one post yesterday, “Japan Through the Looking Glass:”

There are indications that Shinzo Abe may indeed do the right thing and postpone the planned rise in Japan’s consumption tax. Let’s hope so. But many people are still treating this as an agonizing choice. For example, Gavyn Davies frames it as a choice between recovery and fiscal sustainability, although he sort of acknowledges that this may be a false dilemma.

Several points here.

First, unless Japan breaks out of deflation, and the artificially high real interest rates this causes, there is no way to achieve fiscal sustainability. Success for Abenomics is as crucial for fiscal matters as everything else.

Second, everyone acknowledges that the impact of a delayed sales tax increase on Japan’s debt would be trivial — less than one percent of GDP. So why is this supposed to be something to worry about? Supposedly, Japan would lose credibility.

Actually, that’s unlikely — I see no prospect that Japan will put off the tax hike forever. But even if it were true, this is credibility Japan wants to lose.

After all, suppose investors conclude that Japan will never raise taxes enough to service its debt. What would they think would happen instead? Not default — Japan doesn’t have to default, because its debts are in its own currency. No, what they might fear is monetization: Japan will print lots of yen to cover deficits. And this will lead to inflation. So a loss of fiscal credibility would lead to expectations of future inflation, which is a problem for Abe’s efforts to, um, get people to expect inflation rather than deflation, because … what?

Long ago I argued that what Japan needed was a credible promise to be irresponsible. And deficits that must be monetized are one way to make that happen (as they were in the 1930s, when Japan had a very successful comeback from the Great Depression, aside from that invading China thing.)

As I and other people like Paul McCulley have tried to explain many times, the liquidity trap puts you on the other side of the looking glass; virtue is vice, prudence is folly, central bank independence is a bad thing and the threat of monetized deficits is to be welcomed, not feared.

As it happens, I don’t think this stuff will come into play in Japan, where the Ministry of Finance’s deficit obsession ensures that tax hikes will at best be delayed, not canceled. But the whole premise of those who fear the consequences of delay misses the point.

Blow and Krugman

November 17, 2014

In “Partisanship Breaks the Government” Mr. Blow says the Republicans’ goal is to have a destructive fight.  Prof. Krugman considers “When Government Succeeds” and tells us that there is a lot of good news that Republicans don’t want you to notice.  Here’s Mr. Blow:

This could be a rather heated winter. All three branches of government are on course to collide over partisan politics, constitutional authority and scope of power, particularly as vested in the executive branch.

The president has wasted no time moving beyond the Democrats’ midterm defeats. He is setting about ensuring his legacy. His advisers say he feels liberated by not having to worry about any more congressional elections.

He has secured a historic climate change agreement with China that John Boehner called part of the president’s “job-crushing policies” and his “crusade against affordable, reliable energy.”

President Obama went further on Saturday, signaling that he will soon announce “that the United States will contribute $3 billion to a new international fund intended to help the world’s poorest countries address the effects of climate change,” according to The Times.

Obama has also called on the Federal Communications Commission to adopt net-neutrality rules that Ted Cruz called “Obamacare for the Internet.”

But the tipping point will likely come when the president takes executive action on immigration, which, according to reports, could protect up to five million unauthorized immigrants from deportation. Republicans are beside themselves at the prospect.

Amnesty! Out-and-out lawlessness! Shredding the Constitution! No claim — and no recourse — is out of bounds, it seems.

Many conservatives, like Rush Limbaugh, are demanding another government shutdown to stop it. Others, like Charles Krauthammer, have suggested that Obama’s actions on immigration might be “an impeachable offense.”

The grown-ups on the right — to the degree such people exist — know full well that shutdowns and impeachment proceedings are suicidal, but such is the political blood lust on that end of the spectrum that one can’t be sure that cooler heads will prevail over hot ones.

Short of those two nearly nuclear options, John Boehner is reportedly considering suing the president over his planned action on immigration.

This is what the G.O.P. base wants: a fight. According to last week’s report from the Pew Research Center, Republicans, by a margin of more than two to one, want Republican leaders to “stand up to Obama, even if less gets done in Washington,” as if it were possible for this do-nothing Congress to do less.

Congressional Republicans have been sent to Washington with a mandate not so much to conduct business but rather to collect a bounty, to do what they promised and what their supporters expect: Stop Obama at any cost and at every turn, to erase his name or at least put an asterisk by it.

If the speaker should file such a suit, it could drag the Supreme Court into this partisan drama.

But it seems the court isn’t waiting for that. It has already thrust itself into the partisan fray by, to the surprise of many, taking up yet another challenge to the Affordable Care Act. This one, like the last, could prove fatal to the law.

It centers on the question of whether people who signed up through the federal exchanges are eligible for subsidies or if those subsidies are only available to people signing up through exchanges set up by states, something many Republican-led states refused to do.

Some have called this ambiguity little more than a typo in a voluminous bill. Linda Greenhouse, my Times colleague and expert interpreter of all things Supreme Court, called the decision to take the case “worse” than the court’s ruling on Bush v. Gore, as well as “profoundly depressing,” and suggested that the court is beginning to look evermore like “just a collection of politicians in robes.”

But the typo defense is complicated by the comments of an architect of the law, Jonathan Gruber, a health economist. In 2012, he said, “if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.” This suggested that the clause was no accident, or at least one he and others found fortuitous.

While these battles may offer some ephemeral partisan gain — mostly for Republicans — they will suppress support for all three branches of government and further diminish public faith in the efficacy of government as a whole.

According to a June poll by Gallup, “Americans’ confidence in all three branches of the U.S. government has fallen, reaching record lows for the Supreme Court (30 percent) and Congress (7 percent), and a six-year low for the presidency (29 percent).” While the blood sport of these clashes is likely to enthrall pundits and policy wonks, I fear that it won’t be good for the republic — particularly Democrats.

Liberal ideology depends on a productive federal government; conservatism rises when that government is crippled.

Republicans, in all their cynicism, are increasing their efforts to break the government.

Isn’t America great?

And now here’s Prof. Krugman:

The great American Ebola freakout of 2014 seems to be over. The disease is still ravaging Africa, and as with any epidemic, there’s always a risk of a renewed outbreak. But there haven’t been any new U.S. cases for a while, and popular anxiety is fading fast.

Before we move on, however, let’s try to learn something from the panic.

When the freakout was at its peak, Ebola wasn’t just a disease — it was a political metaphor. It was, specifically, held up by America’s right wing as a symbol of government failure. The usual suspects claimed that the Obama administration was falling down on the job, but more than that, they insisted that conventional policy was incapable of dealing with the situation. Leading Republicans suggested ignoring everything we know about disease control and resorting to extreme measures like travel bans, while mocking claims that health officials knew what they were doing.

Guess what: Those officials actually did know what they were doing. The real lesson of the Ebola story is that sometimes public policy is succeeding even while partisans are screaming about failure. And it’s not the only recent story along those lines.

Here’s another: Remember Solyndra? It was a renewable-energy firm that borrowed money using Department of Energy guarantees, then went bust, costing the Treasury $528 million. And conservatives have pounded on that loss relentlessly, turning it into a symbol of what they claim is rampant crony capitalism and a huge waste of taxpayer money.

Defenders of the energy program tried in vain to point out that anyone who makes a lot of investments, whether it’s the government or a private venture capitalist, is going to see some of those investments go bad. For example, Warren Buffett is an investing legend, with good reason — but even he has had his share of lemons, like the $873 million loss he announced earlier this year on his investment in a Texas energy company. Yes, that’s half again as big as the federal loss on Solyndra.

The question is not whether the Department of Energy has made some bad loans — if it hasn’t, it’s not taking enough risks. It’s whether it has a pattern of bad loans. And the answer, it turns out, is no. Last week the department revealed that the program that included Solyndra is, in fact, on track to return profits of $5 billion or more.

Then there’s health reform. As usual, much of the national dialogue over the Affordable Care Act is being dominated by fake scandals drummed up by the enemies of reform. But if you look at the actual results so far, they’re remarkably good. The number of Americans without health insurance has dropped sharply, with around 10 million of the previously uninsured now covered; the program’s costs remain below expectations, with average premium rises for next year well below historical rates of increase; and a new Gallup survey finds that the newly insured are very satisfied with their coverage. By any normal standards, this is a dramatic example of policy success, verging on policy triumph.

One last item: Remember all the mockery of Obama administration assertions that budget deficits, which soared during the financial crisis, would come down as the economy recovered? Surely the exploding costs of Obamacare, combined with a stimulus program that would become a perpetual boondoggle, would lead to vast amounts of red ink, right? Well, no — the deficit has indeed come down rapidly, and as a share of G.D.P. it’s back down to pre-crisis levels.

The moral of these stories is not that the government is always right and always succeeds. Of course there are bad decisions and bad programs. But modern American political discourse is dominated by cheap cynicism about public policy, a free-floating contempt for any and all efforts to improve our lives. And this cheap cynicism is completely unjustified. It’s true that government-hating politicians can sometimes turn their predictions of failure into self-fulfilling prophecies, but when leaders want to make government work, they can.

And let’s be clear: The government policies we’re talking about here are hugely important. We need serious public health policy, not fear-mongering, to contain infectious disease. We need government action to promote renewable energy and fight climate change. Government programs are the only realistic answer for tens of millions of Americans who would otherwise be denied essential health care.

Conservatives want you to believe that while the goals of public programs on health, energy and more may be laudable, experience shows that such programs are doomed to failure. Don’t believe them. Yes, sometimes government officials, being human, get things wrong. But we’re actually surrounded by examples of government success, which they don’t want you to notice.

And of course the “liberal media” doesn’t seem to be saying a word, does it???


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